recruitment agencies -contract work

bettersoon

Hi there,

Does anyone know if there are any charges to pay the agencies regarding contract work? OH might have an interview through a recruiter and they have asked him to send email to make it official that they are representing him?

InsideInsurance

Assuming it is something like an IT Contractor the agency will add 15-20% on top of your partners day rate but the advertised amounts will be net of VAT and/or agency fee.

So classic IT contractor using a Ltd as their vehicle on £300 a day will invoice the agency at £360 (day rate + vat) and the agency in turn invoices the client £414 (day rate + agency + vat)

Normally agencies want you to confirm you'll be represented by them before they'll either release the clients name and/ or pass your details to the client to prevent you cutting them out the loop and going direct to the client.

Larger clients who regularly use agencies will have a preferred supplier list and the "agency" element will be almost totally irrelevant to you. Only if the job is advertised at £300 and you want £310 then the agency may consider sacrificing some of its commission if the client wont budge.

For smaller clients who arent as used to using contractors the idea of "agency" possibly is less well defined and they will be considering the total cost of the head but in these cases the agents normally mark down the advertised rates to allow for their commission.

bettersoon

Sorry to sound dim, so the client is paying the agent the commission not us? If client says £350 per day on job spec, OH will take home £350?

liney

The commission is paid by the client to the agency for 'finding' your husband.

bettersoon

Thanks for that guys!

Now we need to think about registering as a limited company? and will he be paying less tax than being in full time employment?

InsideInsurance

Speak to an accountant, most give a free 30 minute intro but try and find one that is used to dealing with contractors and thus know about IR35.

As has been in the press a lot recently, yes, by using a Ltd you can typically reduce the amount of tax you need to pay. Likewise you can register for VAT but as long as your basic turnover is going to be below £150,000 you can go for the flat rate scheme which enables you to make a profit on the VAT too.

bettersoon

are you using an accountant? How much do they charge for this kind of service? will have to do some more reading up tonight!

InsideInsurance

Yes I do, they can easily pay for themselves in ensuring you are mitigating your tax but staying on the right side of the law.

The level of service can vary and so thus also the fees. I, like most, arent paying for a fully proactive or advisory service. So once a year they do a lot and they'll answer questions I raise but dont spend hours analysing data and contacting you to suggest you do X, Y or Z.

For my money I get their address as the registered office, I send quarterly spreadsheets of invoices and receipts and they do all the returns, they run payroll and personal returns for the two company officials and they review each contract for IR35 issues.

The fee I pay is £1200 pa inc VAT but of cause that is an allowable expense so in reality it is £720pa you see off the bottom line.

There are some paying less but they didnt get help initially dealing with setting up the company, setting wages etc. Some are paying more and just send a shoe box of receipts rather than a spreadsheet.